How Dangerous is This TLH Strategy?

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MonkeyMonk
Posts: 9
Joined: Wed Oct 16, 2019 11:47 am

How Dangerous is This TLH Strategy?

Post by MonkeyMonk » Wed Mar 25, 2020 9:32 am

I've been doing a fair amount of TLH over this market downturn. I'm usually a buy-and-hold agnostic with a firm belief that my 70/30 AA is the proper AA for me. Other than a single 5% band rebalance I've done a good job of maintaining that.

That's not to say this downturn hasn't rattled me a bit. As a result I've been getting a little fancier than normal with my TLH strategy. Usually I do a straight exchange on the same day but with this market I've been selling on overly exuberant bounces (like yesterday, 3/25) and then completing the TLH on the next day's eventual fall back to reality -- or gain, although that hasn't happened yet. This has been working consistently and I've probably netted a good $40k-$50k so far from where I'd be otherwise.

Eventually I'm going to get burned but the gain so far seems to far outweigh the negatives. Are there any larger pitfalls I'm not seeing?

We'll see how today pans out...

livesoft
Posts: 70272
Joined: Thu Mar 01, 2007 8:00 pm

Re: How Dangerous is This TLH Strategy?

Post by livesoft » Wed Mar 25, 2020 9:42 am

It is dangerous enough to give you $40K to $50K over doing nothing. There is no such thing as a free lunch, so if you want the added risk, then I don't see any problems. I don't think anyone can give you an answer to your question. But don't ask or tell any of your friends or they will think you are humble bragging.
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mega317
Posts: 3717
Joined: Tue Apr 19, 2016 10:55 am

Re: How Dangerous is This TLH Strategy?

Post by mega317 » Wed Mar 25, 2020 9:51 am

It's a little weird to say you're rattled but also doing something to increase risk. Another counter is that when you sold at the end of yesterday you missed some losses so if the market is up again today you've erred twice. I guess that's what you already understand.
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MotoTrojan
Posts: 9264
Joined: Wed Feb 01, 2017 8:39 pm

Re: How Dangerous is This TLH Strategy?

Post by MotoTrojan » Wed Mar 25, 2020 9:56 am

If I were you I would count myself lucky and revert back to a buy & hold strategy, with proper exchanges for any future TLH.

desafinado
Posts: 168
Joined: Wed Dec 28, 2016 3:14 am

Re: How Dangerous is This TLH Strategy?

Post by desafinado » Wed Mar 25, 2020 11:44 am

seems like the risk has shown up

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